Chatfield, Spring Valley to
benefit from Rochester sales tax

Officials in Spring Valley and Chatfield had reason to celebrate the extension of the local-option sales tax last week by Rochester voters because a portion of the money raised will go to economic development in the two cities.

By a 65 percent to 35 percent margin during the general election Tuesday, Rochester voters approved the sales tax. This is the fourth time voters have reauthorized the tax, but the first time a portion of it will go directly to other communities.

Spring Valley economic development director Cathy Enerson said the tax extension will provide a "helpful economic development tool for Spring Valley."

Chatfield city clerk Joel Young said he was pleased the sales tax option was approved and is "looking forward to putting some of those funds to work in Chatfield."

The sales tax on purchases in Rochester hasn't always generated good feelings from the neighboring communities. In the past it was a point of contention as the feeling was that people from outside the city - some estimates conclude that 60 percent of the tax is paid by non-residents - are paying for projects that benefit only citizens of Rochester.

For many years, one of the biggest opponents was Rep. Greg Davids, R-Preston, who two years ago became chairman of the Minnesota House Taxes Committee. When Rochester sought approval for the extension from the Legislature in 2011, Davids said he made sure that the benefits extended to the region.

The House tax bill, authored by Davids and approved during a special session in 2011 after the state shutdown, included a provision that $5 million be allocated for grants to 17 small communities surrounding Rochester, including Spring Valley and Chatfield, for economic development projects. Davids joked that he was enforcing his "good neighbor policy - like State Farm."

However, he added that it isn't just the direct funding for economic development that is part of the special sales tax. The $139.5 million raised by the half-cent sales tax will also go to fund special projects for the University of Minnesota, Winona State University, the airport, Mayo Clinic through the Destination Medical Community and other regional initiatives that aid the entire area.

"I really feel we have to work as a team here," he said. "Since 60 percent of the people outside the city are paying this, they should see some benefit."

The first sales tax was approved in 1983 as a way to pay for the city's portion of a federal flood control project that came about as a result of a 1978 flood that killed five people and caused millions of dollars in damage. The tax was reauthorized in 1990, 1998 and 2005 for various other Rochester community projects.

There are still questions about how the new provision that allocates money to small communities outside Rochester will work. The mechanics of the legislation wasn't spelled out, said Davids, as the state just set broad parameters for use of the sales tax money. He did say he expects the money to be allocated on a per capita basis.

Enerson has met with Rochester's city administrator and her feeling is that it will be a relatively simple process as long as a city can prove that the funds will benefit economic development. City officials expect a meeting in early December in Rochester to discuss details.

Young said he is also uncertain how much money will be available to Chatfield or what the timing of those dollars might be. However, he said he knows Chatfield has "ample opportunities for business development, job creation and life enhancements.

"I look forward to doing our part, right here in Chatfield, to boost job prospects and to further develop our community and region."

Enerson also feels that "it will be exciting to put these new dollars to work in Spring Valley." She applauded Davids for adding these two cities to the original list of 14 cities, all in Olmsted County.

"Sharing the tax with rural neighbors who pay into the fund with their purchases makes sense," said Enerson. "These economic development dollars will strengthen the rural communities and, after all, sharing creates healthy, strong, vibrant neighboring communities and these communities are the gateway to Rochester."